What the IRS asks you to write down
Publication 531 asks for a daily record. For each day you work:
- cash tips from customers, and tips other employees pass to you;
- card tips your employer pays you;
- the value of noncash tips, like tickets or passes;
- what you paid out to other employees through a tip pool or tip-out, and their names.
The IRS has its own sheet for this, Form 4070A, in Publication 1244. A notebook, a spreadsheet or an app does the job too. What matters is writing it on the day, or close to it, and keeping it with your tax records.
Report to your employer every month
If your tips at one job reach $20 or more in a month, give your employer a written report by the 10th of the next month, on Form 4070 or in its own system. Report the cash and card tips you got, but not what you passed on: whoever gets your tip-out reports that part (Publication 531). Your employer uses the report to withhold taxes. Tips you didn’t report there go on Form 4137 with your tax return.
Why the log matters more from 2025 to 2028
The No tax on tips deduction lets you take up to $25,000 of qualified tips a year off your federal taxable income, for tax years 2025 through 2028. It shrinks by $100 for each full $1,000 your modified adjusted gross income goes over $150,000, or $300,000 on a joint return (IRS).
Restaurant and bar jobs are on the IRS list of tipped occupations, from bartenders and servers to bussers, cooks, hosts and dishwashers. A few rules decide what counts:
- Only reported tips: on your W-2, or on Form 4137 with your return.
- Tips the customer chose to leave, cash or card, including your share of a pool. An automatic service charge doesn’t count, even when it’s shared with the staff.
- You need a valid Social Security number, and married couples have to file jointly.
- It’s a federal income tax deduction. Social Security and Medicare still apply, and your state may not follow it.
From the 2026 tax year, your W-2 shows your tips in box 12 with code TP (Form W-2). The IRS’s Form 1040 instructions name daily tip logs among the records that back up the deduction. To see what yours could come to, try the No tax on tips calculator.
A week in a tip log
| Day | Cash | Card | Tip-out, and to whom | Kept |
|---|---|---|---|---|
| Mon | $42.00 | $88.50 | −$9.80Ana (busser) | $120.70 |
| Wed | $35.00 | $121.40 | −$12.20Ana (busser) | $144.20 |
| Fri | $96.00 | $164.00 | −$38.10Ana (busser), Luis (bar) | $221.90 |
| Sat | $118.00 | $203.60 | −$46.30Ana, Luis, Dee (runner) | $275.30 |
| Sun brunch | $0.00 | $0.00 | $0.00Pooled, split by hours | $142.50 |
| Week | $291.00 | $577.50 | −$106.40 | $904.60 |
“Kept” is what you report: cash, plus card, plus what came from the pool, minus your tip-out. This week that’s $904.60. The names next to the tip-out are there because the IRS asks for them, and because they show that $106.40 was never yours to report.
A log that holds up
- Write it the same night, before you leave, with the check-out slip still in your apron.
- Keep cash apart from card. Card tips are in your employer’s records. Cash is only in yours.
- Put names on the tip-out, and the role if you work with a lot of people.
- Keep the slips. POS check-outs back up your numbers. The IRS’s general rule is to keep records 3 years after you file (IRS).
- Hold it up to your W-2 in January. A year of kept tips should line up with box 7 and, from 2026, box 12 code TP. If box 8 shows allocated tips, your log is what answers it.
On paper, in a spreadsheet or in the app
Paper works if it’s always with you: one sheet a month, one line a day, like this free printable tip log. A spreadsheet adds the totals for you: here’s a tip log spreadsheet with a summary by month. PayJar does it as part of clocking out: you add cash, card and your pool share, it takes off the tip-out by your rule, and it keeps the month and the year by job, with what you kept per hour. It exports to Excel or CSV, free, any time. It’s a record for you and whoever does your taxes, not tax advice.